Discuss how innovation affects international business.

Are innovations essential

for companies to survive?

When we talk about innovation, we mean something that has not been used before,
and this must have some useful properties that are superior in quality and characteristics to
the things that have been replaced by innovation. Innovation is the main tool in an
increasingly competitive business environment. Innovation is usually associated with
technical equipment, new information technologies, but this is only a small part of what is
meant by the word “innovation” (Cantwell, 2016). International business companies often
focus on business competence as a development goal. When a company starts international
transactions or operates in international markets, business competence is of particular
importance. As the economy globalizes, companies also face increasing international
competition. Internationalization is an innovation in international business and it is necessary
for companies at an earlier stage, in addition to the continuous development of
internationalization skills and competitiveness. The use of technologies, innovations,
competencies and rapid internationalization of companies are key factors for the success of
international business. The internationalization of enterprises as an innovative process has
developed significantly in recent decades. The goal of research on internationalization in
international business was to understand internationalization as innovation and multinational
enterprises, and the similarities and differences between factors related to internationalization
and factors that affect business innovation processes.
In international business enterprises, the process of innovation and
internationalization is closely interrelated. The development of innovation is a key event in
entrepreneurship, and the exclusion of the innovation process from the consideration of
internationalization may leave the key mechanisms of internationalization unaddressed
(Ulijn, 2000). Therefore, internationalization should be part of the company’s activities from
the very beginning of innovation development. Integrating the international business of
innovative entrepreneurial companies into the innovation process is a difficult task. What is
needed to link the processes of innovation and internationalization together? This requires
external innovation cooperation from the very beginning of the innovation process,
motivation for international growth and inventive use of resources.
International business research is an important area of business research, since in
many small countries the key task of the innovation system is to create innovative business
companies that seek to grow abroad. The key issue from the point of view of management
and innovation policy is how to create a dynamic and strong innovation environment that
supports growth and promotes the development of entrepreneurship that can transform
technologies and inventions developed domestically into successful international business. In
addition to government support for business growth, this success requires the ability to
participate in global ecosystems and innovation development networks. Exploring and
exploiting global resources has become an important function in entrepreneurial companies,
allowing companies to participate in international innovation development long before launch
(Brennan, Garvey, 2009). International business can benefit from foreign innovative
partnerships due to increased internationalization in the modern world. This can be achieved
by extending the prospect of acquiring rarely used resources to the very beginning of the
entrepreneurial activity-the innovation process.
Understanding business innovation is important because innovation is an integral part
of entrepreneurship and its key feature in international business. Innovation and business are
seen as integral functions in a company that aspires to international entrepreneurial business.
The goal of international business is to develop and commercialize innovations in an
international context. Thus, entrepreneurial internationalization can be considered as a
process that combines the process of innovation and internationalization, although these
processes were previously considered separately.
Internationalization is traditionally seen as an external activity, such as export.
However, a more accurate picture of the phases and mechanisms of the internationalization
process can be obtained by paying special attention to the acquisition of foreign resources.
When an international business is understood as a space rather than a result, a business
company can follow the principles of resource-based internationalization. The missing
resources that a business company uses to develop innovation and, later, to internationalize
are acquired through various cooperative relationships (Cantwell, 2016). Resources form
internal and external links in the process of internationalization. This factor can be considered
as contributing to the internationalization and strengthening of international relations in
business.
Innovative collaboration is now a business, and collaborative relationships can be seen
as an important intangible resource for a company, as they exchange and acquire missing
knowledge to promote innovative development and internationalization. Research has found
that small businesses focus on local collaboration networks, which can lead to a disruptive
takeover of technology, knowledge, or know-how and negatively affect a company’s ability
to innovate (O’Cass, Weerawardena, 2009). The problem of technological shortsightedness
can be solved, for example, by searching for foreign sources of information and technologies,
without focusing solely on domestic cooperation. Although the advantages of foreign
partnerships for small innovative firms are not clear – for example, the literature on open
innovation does not take into account the geographical dimension of cooperation
relationships or the quality of cooperation relationships, we can see the positive impact of
foreign cooperation on internationalization. Only cooperative relationships should be used.
Innovations that relate to commercial inventions come from a variety of sources. In
the innovation literature, a distinction is usually made between demand-based inventions and
scientific research, since they stimulate a completely different type of innovation
development process. In the first case, the market where the invention is implemented is
known, while in the second case, the scope of the invention is developed and demand arises.
Like the internationalization process, the innovation process can be seen as cyclical in a
company, producing advanced innovations such as additions to product creation.
Transnational international business is best achieved through innovation and
entrepreneurship policies that aim to strengthen research, development and innovation and
create a climate for business growth. On the other hand, internationalization as an innovation
process is often included in support measures for small and medium-sized enterprises. These
policy areas need to work together in a holistic manner to achieve the best results, but
especially in small countries, the simultaneous implementation of multiple programs or
policies is a challenge.
In conclusion, some observations were made, in particular, in support of
internationalization as a type of resource-based innovation, with an emphasis, for example,
on the pre-commercial phase of innovation. The first of them can be identified as linking
companies to foreign resource networks at the early stages of the innovation process. Instead
of just communicating, the focus should be on collaboration and collaborative creativity. We
hope that this will lead to a culture of collaboration in which special attention will be paid to
the exchange of resources, knowledge and know-how between small businesses and other
participants in innovation at the international level. The collaborative economy approach can
also be applied to business research. International business companies will benefit from a
well-functioning public experimental environment spread abroad. For example, in sectors
where clinical trials are vital, a foreign partner can handle them. Access to foreign test
environments can be organized through universities and research institutes, by connecting
companies at the early stages of the innovation process to projects abroad – not only to
networks, but also to joint development. Because of the nature of research, universities and
research institutes are essentially networked abroad, and better use of these collaborative
relationships can prevent companies from unnecessarily lengthening the innovation process.
International business is growing along with innovation and entrepreneurship, and this is not
instantaneous. The growth process can take decades in an innovative entrepreneurial
company, and policy would like to use this period to ensure international entrepreneurship.

References

1. Cantwell, J. (2016). Innovation and international business. Journal Industry and

Innovation, Vol. 24(1): Industry and Innovation’s New Focus Themes, pp. 41-60.
2. Sullivan, D., Daniels, J. (2008). Innovation in international business research: a call for
multiple paradigms. Journal Int. Bus. Stud. 39, pp. 1081-1090.
3. Vecchi, A., Brennan, L. (2009). A cultural perspective on innovation in international
manufacturing. Research in International Business and Finance, Vol. 23(2), pp. 181-192.
4. Ulijn, J. (2000). Innovation and Intеrnational Business Communication: Саn European
Research Hеlp to Increase the Vаlidity and Reliability for Оur Business and Teaching
Practice? Оutstanding Researcher Lecture. The Jоurnal of Business Cоmmunication,
Vol. 37(2), pp. 173-187.
5. Ulijn, J., O’Hair, D., Weggeman, M., Ledlow, G., Hall, H. T. (2000). Innovation,
Corporate Strategy, and Cultural Context: What Is the Mission for International Business
Communication? The Journal of Business Communication, Vol. 37(3), pp. 293-316.
6. O’Cass, A., Weerawardena, J. (2009). Examining the role of international
entrepreneurship, innovation and international market performance in SME
internationalization. European Journal of Marketing. ISSN: 0309-0566.
7. Brennan, L., Garvey, D. (2009). The role of knowledge in internationalization. Research
in International Business and Finance, Vol. 23(2), pp. 120-133.
8. Morales, R. R., Gamberger, D., Šmuc, T., Azuaje, F. (2009). Innovative methods in
assessing political risk for business internationalization. Research in International
Business and Finance, Vol. 23(2), pp. 144-156.